Key takeaways about FDIC insurance

Banks are safe and stable places to store your money. Still, recent history has reminded us that these institutions can fail, meaning they can no longer meet their obligations to the people who have deposited money with them or to those they’ve borrowed from. to learn more about what happens when a bank fails.

The FDIC insurance limit: $250,000 per depositor, per institution, per category

In the rare case that a bank fails, a customer's money is protected as long as a bank is federally insured. A bank that’s federally insured is backed by the Federal Deposit Insurance Corp. Credit unions offer protection as well, through the National Credit Union Administration. The FDIC insures up to $250,000 per depositor, per institution and per ownership category. FDIC insurance kicks in only if a bank fails. to learn the details of what is covered by FDIC insurance.

Here’s a closer look at what the FDIC is, exactly what it insures and how it guards your hard-earned cash.

What it means to have FDIC insurance

Banks aren't insured by default. They apply for FDIC insurance and, like most forms of insurance, it comes at a cost. But you don’t pay a monthly fee, nor do your tax dollars foot the bill. The bank pays the premiums.

FDIC insurance: What’s covered

FDIC insurance: What’s not covered

U.S. Treasury bills, bonds and notes also aren't covered by FDIC insurance, but they are backed by the full faith and credit of the federal government.

How to check that all money in your accounts is insured

If you can’t tell if all your cash is insured at a glance, the FDIC has a tool called the Electronic Deposit Insurance Estimator to show your specific deposit insurance coverage once you put in your account details. The FDIC also has a support center to field complaints and inquiries.

What happens when a bank fails

If a bank fails, such as by losing the ability to pay back debts or return deposits to customers, a bank regulator closes that institution. The FDIC steps in to protect the bank customers’ funds generally in two ways: paying (or providing access to) funds to affected customers up to the insurance limit and assuming control of the assets and debts of the bank. In the second role, the FDIC becomes the “receiver” of the failed bank to sell or collect assets, settle debts and manage insured deposits. The FDIC typically arranges for a healthy bank to acquire a failed bank.

First Republic Bank marks the third high-profile bank failure in 2023. On March 10, the tech industry lender Silicon Valley Bank in Santa Clara, California, failed, and two days later, Signature Bank in New York failed. In both cases, the FDIC temporarily created "bridge banks" to hold the former institutions' deposits and assets to give the FDIC time to sell the banks. In a joint statement on March 12, the Treasury, Federal Reserve and FDIC said that all customers at Silicon Valley Bank and Signature Bank would have access to all of their deposits, insured and uninsured. That excluded shareholders and some unsecured debtholders. On March 20, Flagstar Bank acquired Signature Bank, and on March 26, First Citizens Bank acquired Silicon Valley Bank.

Two more banks have failed in 2023: In July, Heartland Tri-State Bank in Kansas closed and Dream First Bank took over its deposit accounts and assets, and in November, Citizens Bank closed in Iowa and Iowa Trust & Savings Bank took over its assets and deposit accounts.

Bank failures generally happen to very few banks, though there can be spikes during and after a recession. Since 2001, there have been 566 bank failures, the majority occurring as a result of the 2007-2009 recession. For reference, there are roughly 4,600 FDIC-insured banks, as of November 2023. Silicon Valley Bank, Signature Bank and First Republic Bank were the first banks to fail since October 2020.

FDIC insurance limits and ownership categories

What does it mean to have FDIC insurance coverage up to $250,000 per depositor, per institution and per ownership category?

Per depositor, per institution: This means that the FDIC insures deposits that one person (the depositor) owns in one insured bank (the institution), and that’s separate from any deposits that person owns in another, different insured bank. If a person owns deposits in different branches of the same insured bank, those deposits are counted together toward the $250,000 limit.

Per ownership category: Ownership category simply refers to who owns the account. The easiest distinction is between single, meaning an account owned by just one person, and joint, meaning an account shared by two or more people. Other kinds of ownership categories include certain retirement accounts, such as IRAs, trust accounts and employee benefit plan accounts.

There’s separate coverage for money that’s in different categories of ownership. So a person who has multiple accounts at an insured bank could qualify for more than $250,000 in coverage if their funds are in accounts that are in different ownership categories and other requirements are met. And if an account is co-owned by two people, for example, that account is insured up to $250,000 per person, for a total of $500,000.

Examples of FDIC insurance limits and coverage

Consider some examples to understand the limits of FDIC coverages.

1. You’re single, do your banking in one place and you have:

That’s a total of $350,000 deposited in one bank as one depositor (you), at one institution (your bank) and in one ownership category (single). If your bank were to fail, you’d lose $100,000 because the FDIC would cover only up to $250,000.

Don’t fret, though, because the next-most important thing to know about FDIC coverage is that you can be insured for much more depending on where you keep your accounts and how they are owned. One way to make sure all of your money is insured is to spread it across multiple institutions. Consider the next example.

2. You’re single but you do your banking at two banks, and you have:

That’s a total of $500,000 deposited as one depositor (you) at two institutions (two banks) and in one ownership category (single). Since you have $250,000 at one bank and $250,000 at another bank, all of your money is protected.

Take a look at one more example of how different ownership categories affect how your money is insured.

3. You’re married, you both do your banking at the same place and together you have:

That's a total of $750,000. All of this money is protected. The joint savings account is one ownership category (joint), where both you and your spouse are covered up to $250,000 each since you are two different depositors. The certificate of deposit is in a second ownership category (single), so the depositor (you) is covered up to $250,000 for that account.

There are too many combinations to cover them all here. Just know that you have options to make sure all of your money is insured. If you're in danger of bumping up against or exceeding the $250,000 limit at any one institution, consider spreading your money across multiple banks so that all of your funds are insured.

How to find out if your bank is FDIC insured

To find out whether your deposits are federally insured, search for your bank on the FDIC’s BankFind tool. You can also look for the FDIC insurance logo on the bank site. Displaying this logo is a requirement for insured banks. You can check the FDIC site to see how the official logo should appear.